ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fiscal Space and Union Budget 2020–21

This article points out some drawbacks in the criticism of the Union Budget 2020–21. It notes that the critique suffers from some limitations, ranging from oversimplified solutions, analytical deficiencies and outright factual errors.

 

The paper “Fiscal Restraint Trumps Fiscal Stimulus” by Sudipto Mundle and Ajaya Sahu (2020: 19–23) seeks to provide an analysis of the Union Budget 2020–21. The authors have rightly pointed out that the budget could not provide the crucial fiscal impetus on the pretext of constraints or lack of additional fiscal space. They have also pointed out the ways of financing the stimulus keeping the fiscal deficit and the public sector borrowing in check. In short, though it is a comprehensive and remarkable analysis of the budget, yet the paper suffers from some limitations, ranging from oversimplified solutions, analytical deficiencies and outright factual errors.

First, the authors’ claim on the amount of `210 lakh crore that the government expects to acquire through pla­nned disinvestments of public enterprises like the Life Insurance Corporation (LIC), the Industrial Development Bank of ­India (IDBI), etc, is utterly misguided, as the proposed amount is only `2.1 lakh crore. Furthermore, the disinvestment target for 2019–20 has been incorrectly cited as `105 lakh crore when the actual figure is only `1.05 lakh crore.

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Updated On : 23rd May, 2021
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